tv Nightly Business Report PBS December 31, 2012 6:30pm-7:00pm EST
captioning sponsored by wpbt >> this is n.b.r. >> susie: good evening everyone, and happy new year. i'm susie gharib. with just hours to go a deal emerges to avert the fiscal cliff, but can congress pass the measure in time? president obama says they can, we've got the latest from washington, on what could happen before the new year's day deadline. and wall street ends the year with a rally and healthy gains. s&p strategist sam stovall joins us with where he sees stocks headed in 2013. that and more tonight on "n.b.r."! washington lawmakers are getting close to a fiscal cliff deal,
but they might not get it done before the midnight deadline tonight. the senate could vote in time, but it's possible the house will wait until tuesday. that means the u.s. could go over the fiscal cliff. on wall street today, investors bought up stocks on high hopes of deal, after president obama said this afternoon a deal is "in sight," and positive comments from republican leaders in the senate. here's how e major averagesr closed on this last trading day of 2012. the dow surged 166 points, the nasdaq jumped about 60, and the s&p rose almost 24 points. while wall street has already closed the books on 2012, washington still has a few hours to go before its new year's day fiscal cliff deadline. darren gersh has the latest. >> reporter: after a weekend of late-night negotiations with the vice presidt, senate republican leader mitch mcconnell said an agreement on the fiscal cliff was very, very close. >> we'll continue to work on
finding smarter ways to cut spending, but let's not let that hold up protecting americans from the tax hike that will take place in about 10 hours. >> reporter: the deal would raise the top tax rate for individuals making more than $400,000 and couples with more than $450,000 in income. itemized deductions would be limited for individuals making more than $250,000 and couples making more than $300,000. the estate tax would rise to 40%. emergency unemployment benefits would be extended for another year. the alternative minimum tax would be adjusted for inflation permanently. and, in an effort to boost the economy, small businesses would be eligible for another year of bonus depreciation when they buy equipment. the big hang up is what to do about the sequester-- $110 billion in automatic spending cuts in defense and domestic programs that begin at midnight. democrats want to postpone the cuts for a year or more. republicans for just a few months. >> i think there are some republicans who believe there is no other trigger that will force another full scale debate on spending.
>> the president says taxincrea. cutting spenting next year. >> iif they think that is thefos thing they have another think coming. that is not how it's going to work. we have to do this in a balanced and responsible way. and if we are serious about debt reduction then it's going to be a matter of shared sacrifice. that outraged republicans that accused the republicans from moving the goalpost. >> the revenue that has beencams being used not to reduce deficit but to keep spending cogs that s that have been agreed to from not happening. >> suessy it looks like a source
negotiating right now to come up with a to 20 to 30 billion three need to move it back to two to three months and that seems to be going well. talk us through the steps over the next couple of days. let's assume we go over the cliff and there is a good chance of that. can we assume that the democrats and represent republicans are ch they are going to sign off in the next couple of days or has the dynamics changed. >> my new years resolution is tl ball. >> glad to hear that. >> it will take a lot.the sensr and they expect to have a vote by the time the ball drops or maybe just after. the house looks like it's going to come back at 12:00 tomorrow. that's the most difficult part. >> we are hearing that perhapsnt
get a lot of democratic votes to pass wha whatever the central gs tomorrow. if it doesn't come together tomorrow it will come together soon. >> susie: we are listening forwe listening to this drama. how serious is it if we do go over the cliff. what happens tomorrow and the day after. >> it's not tomorrow or the daae next days the markets may be fine and there won't be a big economickieconomic impact. but if it's dragging on to january it looks like the tax increases take effect and people see less money come into nare tr paychecks. and is still potential for the fiscal cliff to do a lot of damage. >> susie: we are going to betala
long time, darren, you better goat that crystal ball in good shape. >> i'm polishing ites tonight. >> susie: thank you very muchdap bureau chief. >> still ahead the most iconic s >> reporter: still ahead, we'll take a look at the business behind the world's most iconic new year's eve celebration. >> susie: to the surprise of many investors, 2012 ended up being a fairly good year for the stock market. the dow rose over 7%, the nasdaq gained even more, up almost 16%, and the s&p closed the year with a 13% gain. erika miller takes a closer look at the forces driving stocks this year. >> reporter: many investors are asking themselves why the stock market did so well this year, when the economy was so weak? the answer is the fed. >> you have to give them a good deal of the credit. they have had quantitative easing again
and again. bernanke has said he does not want us to sleep into that kind of economic coma that seemed to take over japan. >> reporter: and that support from the fed was enough to overcome worries about a weakening global economy, and a debt crisis in europe. but many small investors have missed out on the market's gains this year. on the whole, they've taken money out of stocks, and put it into bonds. >> small investors have become dubious of equities because essentially from 1999 until the beginning of this year, there was no return on equities. they feel they're at a disadvantage to institutional investors and computerized trading. the economy has been lackluster. >> reporter: some of the most aggressive stock buyers have been institutional investors and hedge funds-- searching for ways to make money in a low interest rate environment. many international investors also bought us stocks-- seeing them as more attractive alternatives to investments in emerging markets and europe. >> stocks won by default. it was the last remaining standing asset where you could
get some dividend yield. where you could get a little bit of earnings growth. and where quality companies could deliver you a higher ann tt jthinpuusurttg urtn than just putting your money in cash or bonds. >> reporter: some of the credit for the rally also goes to u.s. corporations. they bought back nearly $400 billion worth of their own shares this year. that's less than last year's total, but higher than the previous two years. record dividend payouts have also helped stocks, because many investors reinvest their dividends. s&p 500 firms paid out cash dividends of $281 billion this year, 17% higher than last year. but most experts don't think retail investors will have an appetite for stocks until the situation on main street more resembles wall street: >> they look around and they say gee, my brother-in-law is still out of work. and things aren't going so well maybe i should save that money rather than investing it. >> reporter: erika miller, "n.b.r.," new york.
>> susie: our market guest tonight expects stocks to do well in 2013. he's sam stovall, chief equity strategist at s&p capital i.q. you heard about them talking about the deal and negotiations. does that change your forecast for 2013. >> well susie it confirms that s congress could teach space shake something about drama. >> the head winds have been wit. there is nothing new added to the equation it's just when wil the congress get it's act together. and our belief is if they don't pass something tomorrow they will early in the new year. >> you have been predicting thsw year. barring anymore drama for the
fiscal cliff what is going to drive stocks higher. >> most global economies willhat quarter by 2 2012 and much of 23 will be a recovery year. also in the u.s. we are looking for 2-point 2% growth and expanding in 2014. and in an in an earnings perspee we saw the trough early this year and going into 2013 see a nine and a half percent increase in u.s. earnings for the s & p 500. >> that is encouraging becausetl up when they all come out for the fourth quarter you are expecting them to be up to 3 and a half percent so nine and a half percent is a big jump.
i can see why you a optimistic on stocks. le's go over the sectors that you think could go well. you have selected three areas. consumer discretionary stocks and consumer and healthcare. tell us why. >> to continue with the story . we argeneral wehave a three andt discount. in terms of consumer discretionary and industrial we are in the favorable seasonal period i saul the call them the stocks do better. we are looking at relatively good earnings growth and from a technical persia perspective wee the mopommen mtu momentum stil e favourses the cycle.v let's look at mcdonald and nor
nonorfolk southern and johnson d johnson. why do you like these stocks is in a unified theme here. >> there is it.each one of thess an above average track record of raising their earnings and give difficuldividends in the past te years. high quality stocks that are offering a dividend should not be avoided and they have recommendations by analysts. mcdonalds here is a company with a increase in sales expect the for their value meals that could expand their market share. in terms of norfolk southern. they have added an investment in their knel knelt knel network ae increased their capacity. and healthcare in a category that ask trading to the market.
johnson and johnson is a company that we would see would benefit from a recent acquisition and new product contributions. >> lots of good information.i'mt there. we are going to coupl count on u coming back in the new year. before we leave you any disclosures to make about these stock recommendations? >> no disclosures i do not only. >> happehappy new year s.
>> susie: tonight's word on the street: "alternative," as in alternative investments. some investors want hard assets, like things you can hold in your hand. here's the street's gregg greenberg with a look at investing in sports memorabilia. stokes anstocks and bonds may be building blocks of a diversified port feel yportfolio. the wil willy mays and micky mas they don't drop and they are higher in spice. steiners is a sports collectible company. he built the company. >> you are in the business ofse. how much does dirt sell for. >> dirt can sell from t.
we have football stadiums and i'm a big fantastic of it. steiner has sold over 25 million of game used dirt and his goal is to sell 100 million. investors home to see their collectibles rise in value because forgery is the industries dirty business. with all of the money printing in washington and inflation creeping up. some say it's smart to holding collectibles to your lineup to stay in the game. >> we need to gis distinguishbed investments. and some of these can be rewarding particularly if we see higher inflation in the years to come. >> you can easily unload yourb u can for a stock or bond.
there will be a healthy demand for the yankee slugger that built the house but now houses the dirt. babe ruth went for record prices. >> he is the face of baseballanp in time. >> not to mention a good facef . john stocks would you mind signing this? >> have you got a basketball? >> susie: on wall street traders popped open thgnchpaame on hopes a fiscal cliff deal was imminent.
big board volume climbed to 730 million shares. six stocks were up for each one that was down. over on the nasdaq volume was more than twice as heavy at 1.5 billion shares. on the sector front, we saw gains of at least 2% in technology, energy and materiapa related stocks. financials were the strongest group this year, rising overr 26%. consumer discretionary stocks advanced over 20% as well. while the defensive health care group added 15%. those banking shares got an added boost today on word that banks could soon reach a $10 billion settlement with u.s. regulators over foreclosure abes. the biggest winner on word of a potential settlement, bank of america. its shares added a quarter, to $11.60. it was the biggest winner on the dow this year. some positive analyst comments on facebook sent shares higher. b.m.o. capital says it's doubling its price target to $32 a share. it says facebook may benefit from a pick up in ad spending. facebook added $0.70 to $26.60.
it looks like apple's mini ipad is a big hit in china. apple's stores both on the mainland and in hong kong are reportedly either out of stock or have tight supplies. apple climbed nearly 4.5% to close at $532. some big changes over the weekend at zynga. the online game maker slashed 11 games from its library as part of its cost-cutting plans. shares of zynga were up just $0.03 to a little more than $2, well below their $10 i.p.o. price from last december. cal-maine foods slipped nearly 10% after the egg producer reported a drop in prices and higher feed costs. shares were down more than $4 to $40. oliffs natural resourd tkeac n some decent gains on the back of some positive manufacturing data from china. cliff's tacked on nearly $3 , or 8.5%. and in the commodities corner, oil and gold both posted some gains on exnsctaatiof o f scal cliff deal in washington.
oil climbed a little more than a dollar to $91 o0, il but p pces still logged their first annual loss in four years. , fo1220crude-oil prices fell more than 7%12 gold climbed nearly $20 to just above n 6. ae.75ounc for the whole year, gold finished higher by 7%. and finally four out of five of the most actively traded e.t.f.s rose on the day.ou but today's buying mood on wall street hit the iph 0 s&p 50vix p e.t.f.t fell over 10%. at it fell over 10%. and that'sd onight's "market focus."'s
>> susie: it's not uncommon for companies to use celebrities and pop culture to market its products. but translating that into sales can be tricky. tom hudson recently spoke to a top branding expert who knows how to strike the right note, when connecting with consumers. >> a branding and advertisingme. steve welcome to the program. >> you were the among the firsto corporate america. what opportunity lie in that bridge. >> well i learned very earlyfroy that there was tremendous affinity amongst young adults and they would gather from different back grounds and graces and rewill i g religionsd music they would all come together. i felt it would be like a very good platform for fortune 500
companies to market their products. >> what greeting did you havewht gap? greeting? well it was tough in the beginning, tom. you are basically trying to get a company of a large organization who was used to marketing a certain way to deal with a shipment. shipment -- shift. a cultural shift. my biggest allies was when these ceo's had teenagers in their household. the teenagers would be list ening to music or partaking in something that the parents didn't ugs and the ugs ug underd an affinity for. it was a lot of corporations that were suffering because they could not get the next generation to adapt and partake in their product offering. >> what is the opportunity outt- younger consumer for these not
only consumer goods companies and financial services companies that cuts across all industries. what is the opportunity? >> it was easy in the 70s and80n too speak to the large populous. but now you have everything stoo niche and broken up and the internet and social media it's hard to grasp a audience and tell the same message. so using the understanding of pop culture and what are some of the cultural tenants that niecee young adults respond to is an opportunity for these brand to communicate their offering. >> what companies are seeing ags investment? >> one of our client is statefa. it's not only about using the music it's understand being the sensibility of it. we took the jingle which was
written by barry manilow. >> i didn't know that.you took o that everyone is familiar withdrewiththrough out generatid what? >> we couldn't tel tell contel u would get service from the state farm agent. >> you can use older messagesa t popular. it's understandening the consumer and able to speak on their terms. steve we appreciate the insight thanks for sharing it with us >> susie: tomorrow on "n.b.r.,"
the markets are closed for the new year's holiday. so we bring you an encore presentation of "made in america," it's an "n.b.r." special edition looking at unique companies, big and small, building jobs and community. new york's times square is best- known for hosting the city's new year's eve celebrations. tonight, the countdown is on to 2013. ruben ramirez braved the crowds for a behind the scenes look at the preparations. >> reporter: the new 2013 sign is up, the ball drop has been tested. the revelers are gathering. it's a celebration new york city style. >> we've got neon trees, carly rae jepsen, taylor swift, jury from univison, the million dollar quartet.trffisau s ts hee president of countdown entertainment. the evening's festivities are part of a public-private partnership between his firm and the city of new york. >> you've got our costs, you've got the cities costs, it's a lot of money, but it's also one of the biggest events in the world. the promotion that new york city gets from times square new year's eve when the world is
watching. that's priceless. >> reporter: and, that means lots of eyeballs for marketers. the big sponsors tonight, nivea, toshiba, philips and the ball's maker, waterford. >> first and foremost. this is a civic event and we needed partners who understood that the civic nature is the priority and if we could build there marketing goals into what is the tradition of the event then it works for everybody. >> reporter: tonight's star attraction weighs in at nearly 12,000 pounds, is made up of nearly 27,000 cut crystal panels and is worth an estimated $1 million. but the celebration isn't just great exposure for the sponsors. >> after the christmas holiday people come to new york city to be part of this big event and they are going to be here having a great time and spending their dollars which helps all of us that live and work here everyday. >> reporter: about one million people are expected to pack time's square for tonight's festivities and more than a billion people are expected to watch around the world. ruben ramirez, "n.b.r.," new
york. >> susie: whatever you do, we hope you make it a safe celebration. i'm susie gharib, from all of us here at "nightly business report," happy new year. we'll see you right back here tomorrow night. captioning sponsored by wpbt media access group at wgbh media access group at wgbh access.wgbh.org >> join us anytime at nbr.com. there, you'll find full episodes of the program, complete show transcripts and all the market stats. also follows us on our facebook page at bizrpt. and on twitter @bizrpt.